Spending vehicles for payments

ABSTRACT

A system and method for associating payments with spending vehicles so that an individual who is entitled to receive periodic or special payments such as social security checks receives in place of the payment a spending vehicle such as a discount card, rebate, or coupon for use with purchases of the sponsor&#39;s products or services. Sponsors include companies and organizations interested in offering purchase incentives to their customers. An individual who wishes to receive a spending vehicle rather than the regular payment selects the spending vehicle he or she would like to receive. The individual then assigns his or her right to receive the payment to a third party. The third party then arranges to give a spending vehicle to the individual and to transfer the individual&#39;s payment to the sponsor of the spending vehicle. The third party may take a portion of the payment as compensation for the service.

RELATED APPLICATIONS

This application is a continuation, and claims priority benefit withregard to all common subject matter, of U.S. patent application Ser. No.12/710,169, filed Feb. 22, 2010, entitled “Spending Vehicles forPayments,” and which issued Dec. 11, 2012, as U.S. Pat. No. 8,332,289(“the '289 patent”). The '289 patent is a continuation, claimingpriority benefit with regard to all common subject matter, of U.S.patent application Ser. No. 11/423,824, filed Jun. 13, 2006, entitled“Spending Vehicles for Payments,” and which issued Feb. 23, 2010, asU.S. Pat. No. 7,668,764 (“the '764 patent”). The '764 patent is acontinuation, claiming priority benefit with regard to all commonsubject matter, of U.S. patent application Ser. No. 09/483,537, filedJan. 14, 2000, entitled “Spending Vehicles for Payments,” and whichissued Jul. 4, 2006, as U.S. Pat. No. 7,072,862.

The '764 patent, to which the present application claims priority, is acontinuation-in-part, claiming priority benefit with regard to allcommon subject matter, of U.S. patent application Ser. No. 09/354,870,filed Jul. 16, 1999, entitled “Tax Refund System,” and which issued Feb.13, 2007, as U.S. Pat. No. 7,177,829.

The earlier filed patents are hereby incorporated by reference in theirentirety into the present application.

BACKGROUND AND SUMMARY

The present invention relates generally to a system and method fordistributing payments to individuals and, more particularly, to a systemand method for allocating a portion or all of an individual's paymentinto a spending vehicle.

Participants in many government and corporate sponsored programs areentitled to regular or periodic payments. For example, in governmentsponsored welfare programs such as Aid to Dependent Children andretirement programs such as Social Security, beneficiaries may receivemonthly payments. Individuals who make regular IRA contributions duringtheir working years may receive monthly or yearly distributions duringtheir retirement years. Employees who participate in their employers'retirement programs such as 401(K) plans, may also receive monthly oryearly distributions during their retirement years. Individuals whoparticipate in other savings and investment plans may receive regular orperiodic dividend payments.

Individuals who receive periodic or regular payments from variousgovernment and corporate plans or programs typically receive a checkfrom the plan or program administrator. Alternatively, individuals mayarrange for an electronic funds transfer (“EFT”) payment. In eithercase, the individuals receive cash payments. Individuals are then freeto use the cash as desired.

Although the cash payments provide individuals with flexibility inmaking purchases, the overall purchasing power available to theindividuals is equivalent to the dollar amount of cash payment.Alternatives to cash payments could provide individuals with increasedpurchasing power. For example, if instead of receiving a cash payment,an individual had the option of receiving a coupon from a retailer foran amount greater than the value of the cash payment, the individualwould receive the benefit of increased purchasing power. Therefore,there is a need for a system and method by which individuals may selectamong alternatives to receiving cash payments.

The present invention provides a system and method for associatingpayments with spending vehicles so that an individual who is entitled toreceive regular or periodic payments (e.g., Social Security checks,401(k) distributions, dividend payments, tax refunds, payroll checks ordeposits, private payment arrangements, or any other source ofpayment(s)) may choose to receive in place of the payment a spendingvehicle such as a credit card, debit card, e-wallet account, gift card,discount card, rebate, coupon for use with purchases of the sponsor'sproducts or services, or anything of value to the payee which the payeeagrees to accept in this form instead of receiving a regular payment bycheck or cash or by direct deposit. Sponsors may include companies andorganizations interested in offering purchase incentives to theircustomers. For example, sponsors may be retailers, manufacturers, orservice providers. An individual who wishes to receive a spendingvehicle rather than the regular payment selects the spending vehicle heor she would like to receive and assigns his or her right to receive thepayment to a third party. The third party assignee may be a sponsoroffering a spending vehicle or it may be a financial institution thatserves as intermediary between an individual and a sponsor. If a sponsoroffers the spending vehicle, the sponsor arranges to give a spendingvehicle to the individual in return for an assignment of theindividual's right to payment. If the spending vehicle is offered by afinancial institution, the financial institution then arranges to give aspending vehicle to the individual and to transfer all or a portion ofthe individual's payment to the sponsor of the spending vehicle. Thefinancial institution may take a portion of the individual's payment ascompensation for the service provided to the individual and the sponsor.Alternatively, the financial institution may offer its own spendingvehicle or it may purchase spending vehicles from various sponsors sothat only one payment for purchase of the spending vehicles is made.

In an embodiment of the present invention, the dollar value of thespending vehicle received by an individual is greater than the dollarvalue of the cash payment the individual would have received. Consumersof the present invention therefore benefit by increasing theirpurchasing power. Alternatively, the dollar value of the spendingvehicle may be equivalent to or less than the dollar value of the cashpayment the individual would have received. In this embodiment of thepresent invention, consumers benefit from the convenience of receiving aspending vehicle for use with purchases at their preferred sponsors.Sponsors benefit from the present invention through increased customerbases and additional traffic. They further benefit from increased salesof their products and services. Payors who make payments available toindividuals benefit from an increase in the use of electronic fundstransfers and a reduction in the printing and mailing of checks toindividuals.

The present invention will be described in greater detail hereinafter.The present invention is described in the form of preferred embodimentsand is not to be limited to those preferred embodiments but insteadshall be given the broadest scope of protection affordable under the lawin view of the allowed claims.

BRIEF DESCRIPTION OF THE DRAWING FIGURES

FIG. 1 is a flow diagram of an embodiment of the present invention;

FIG. 2 is a schematic diagram of a first embodiment of the presentinvention;

FIG. 3 is a schematic diagram of a second embodiment of the presentinvention;

FIG. 4 is a schematic diagram of a third embodiment of the presentinvention; and

FIG. 5 is a schematic diagram of a fourth embodiment of the presentinvention.

DETAILED DESCRIPTION

Referring now to the drawings, there is shown in FIG. 1 a flow diagramfor a preferred embodiment of the system of the present invention. Stepsto accomplish a preferred embodiment of the present invention are shownin FIG. 1. In the first step 10, a plurality of spending vehicles for aplurality of sponsors is created. A spending vehicle may be a creditcard, debit card, cash card, checking card, spending account, checkingaccount, e-wallet account, gift card, discount card, rebate, coupon,voucher or any other type of financial instrument or currency thatenables the holder of the spending vehicle to purchase products orservices. A sponsor may be a retailer, financial institution, serviceprovider, wholesaler, distributor, manufacturer, entertainment entity,travel entity, publisher, governmental entity, insurance institution,brokerage institution, global computer network and online business,consortium of companies, or any participating entity through which anindividual may purchase something of value to the individual. A sponsorparticipating in the system and method of the present invention maychoose to offer one or more spending vehicles to its customers.

In the next step 12, the individual's selection of a spending vehicle isdetermined. The individual may be given the option of selecting morethan one spending vehicle from one or more sponsors. Next 14, theindividual is provided with the spending vehicle or vehicles selected.In exchange for the spending vehicle, the individual assigns his or herright to a payment to a third party in step 14. In one embodiment of thepresent invention, the individual assigns his or her right to paymentdirectly to the sponsor who provided the spending vehicle. Theindividual may arrange to transfer the full amount or less than the fullamount of the payment to the sponsor. The sponsor then provides one ormore of its own spending vehicles to the individual with a value basedon the amount of the payment assigned to the sponsor. In thisembodiment, the sponsor provides a spending vehicle to the individualdirectly without the need of an intermediate entity such as a financialinstitution. The sponsor may be a financial institution. Alternatively,the individual may assign his or her right to payment to a financialinstitution. In this embodiment of the present invention, the financialinstitution may serve as an intermediary between a plurality of sponsorsand an individual. The financial institution may then offer more typesof spending vehicles from more sponsors thereby giving the individualmore options than may be available from a single sponsor. Once theassignment is complete, the assignee of the individual's right topayment, (e.g., the sponsor or financial institution) arranges toreceive the individual's payment in step 18. In step 20, if anintermediary such as a financial institution is the assignee of theright to payment, a portion or all of the payment may then betransferred to the sponsor or sponsors from whom the individual selectedthe spending vehicle. In order to accomplish the transfer of funds, athird party payor may arrange to transfer the individual's payment to asponsor or financial institution entitled to receive the individual'spayment based on the assignment.

Referring to FIG. 2, an embodiment of the present invention in which anindividual 30 obtains a spending vehicle 34 directly from a spendingvehicle provider such as a sponsor 36 is shown. In exchange for theassignment of the payment rights 32 by the individual 30 to the sponsor36, the spending vehicle provider or sponsor (i.e., third partyassignee) provides a spending vehicle 34 to the individual 30.Information regarding the arrangement between the individual 30 andsponsor 36 may then be communicated with the third party payor from whomthe individual is entitled to receive a payment. Payment information 42such as name and account information may be transferred from the sponsor36 to the third party payor 38 so that the sponsor 36 receives theindividual's payment 40 directly. The payor may use electronic fundstransfer to accomplish the transfer so that it is not required toprocess a check or other form of payment to the individual.

In accordance with the present invention, for example, an individual mayassign his or her Social Security check to a retailer and in exchangefor the right to receive the individual's check, the retailer providesthe individual with a spending vehicle such as a credit card or debitcard with a predetermined amount of spending power for use at variousoutlets. The retailer spending vehicle may include an amount of buyingpower greater than the amount of the Social Security check. For example,a retailer may issue a special debit card worth $500 in exchange forreceiving the individual's check of $450. The benefit to the retailer isthat the individual must spend his or her Social Security dollars at theretailer's store(s), and the benefit to the individual may be that theretailer offers buying power at the retailer's store(s) in excess of thedollar amount of the Social Security check.

Under a preferred embodiment of the present invention, the spendingvehicle provider or sponsor may issue, for example, a debit card to anindividual upon receiving confirmation of the receipt of the SocialSecurity check. The credit card or debit card may not be activated untilsuch time as the spending vehicle provider receives the funds for thecheck. The spending vehicle may include a telephone number for anindividual to call to activate the spending vehicle once the spendingvehicle provider is assured of receipt of payment. Once the individual'sspending vehicle is activated, the individual may spend the value of thespending vehicle. For example, an individual who is entitled to receivea $450 Social Security check may assign that amount to a spendingvehicle provider in exchange for $500 of spending power through a debitcard good only at a particular retailer or at some group of retailers.In another example, an individual who is due an IRA distribution of$2,500 may assign his or her distribution amount to an automobile dealerin exchange for the automobile dealer issuing a spending vehicle worth$3,000 in buying power at the auto dealership. In another example, acruise line may offer a spending vehicle of $3,000 in exchange forreceiving the individual's distribution amount of $2,500.

The spending vehicle may take the form of many different embodiments,including but not limited to, credit cards, debit cards, cash cards,checking cards, spending accounts, checking accounts, electronicspending accounts, coupons, vouchers, discount certificates, rebatecertificates, and any other vehicle in which an individual receivesspending power in a particular dollar amount useable at practically anyparticipating retailer, financial institution, service provider,wholesaler, distributor, manufacturer, entertainment entity, travelentity, publisher, governmental entity, insurance institution, brokerageinstitution, global computer network and online business, and anyparticipating entity through which an individual may purchase somethingof value to the individual. A payment may be any type of regular orperiodic payment such as a government, corporate, or employer benefit.It may also be a special one-time payment such as a tax refund or aspecial dividend payment from an investment.

Referring to FIG. 3, use of a financial institution 56 as anintermediary or middleman between the individual 50, the payor 76 fromwhom the individual 50 is entitled to receive a payment, and thespending vehicle provider(s) or sponsor(s) 62, 68, 74 may be preferable.For example, financial institutions are typically well established inproviding spending vehicles such as credit cards and debit cards. Aretailer, for example, may find it helpful to provide its own spendingvehicle if done in conjunction with a financial institution.

As shown in FIG. 3, a financial institution 56 may work with a pluralityof sponsors 62, 68, 74 so that an individual 50 is provided with severaloptions for selecting a spending vehicle. The financial institution 56may arrange to obtain a plurality of spending vehicles 60, 66, 72 from aplurality of sponsors 62, 68, 74. As indicated above, the spendingvehicles 60, 66, 72 may be credit cards, debit cards, cash cards,checking cards, spending accounts, checking accounts, electronicspending accounts, coupons, vouchers, discount certificates, or rebatecertificates. The individual 50 assigns his or her payment rights 52 toa financial institution 56 and selects one or more spending vehicles 54from one or more of the sponsors 62, 68, 74. The individual may assignthe full or less the full amount of the payment to the financialinstitution. The financial institution may arrange to receive theappropriate amount of the individual's payment 78 by providing paymentinformation 80 to the third party payor 76 from whom the individual isentitled to receive a payment. As indicated above, the payor 76 may be agovernmental agency, an employer, or any institution that providespayments to individuals in accordance with instructions from agovernmental agency, corporation, organization, employer, etc. Thepayment 78 may be a Social Security check, 401(k) distribution, dividendpayment, tax refund, etc. The financial institution 56 may then arrangeto transfer to each participating sponsor 62, 68, 74 all or a portion ofthe individual's payment 78. The financial institution 56 may keep aportion of each individual's payment as a fee for allowing sponsorparticipation. Preferably, the value of the spending vehicle 54 selectedby the individual 50 exceeds the value of the payment right 52transferred to the financial institution. In this arrangement,individuals benefit from the increased spending power available from thevarious sponsors. While financial institutions may be beneficial to theprocess of the present invention, they are not essential.

FIG. 4 shows another embodiment of the present invention in which afinancial institution 96 purchases spending vehicles from a sponsor 102.In this embodiment of the present invention, a financial institution 96may make a payment of a lump sum or fixed amount 98 to a sponsor 102 inreturn for a plurality of spending vehicles 100. The financialinstitution 96 may then distribute one of the spending vehicles 94 to anindividual 90 in exchange for the right to receive a payment 92 from theindividual or individual's payor 104. Payment information 108 providedby the financial institution 96 to the payor 104 may then be used totransfer the individual's payment 106 directly to the financialinstitution 96. An electronic funds transfer may be used to complete thetransaction so the payor is relieved of the burden of processing a checkpayment to the individual.

In accordance with this embodiment of the present invention, a financialinstitution 96, for example, may purchase $5,000 worth of coupons for$4,000. The financial institution 96 may then sell the coupons toindividuals for slightly less than the face value of each coupon but formore than it paid for each coupon. Under this arrangement, the sponsorbenefits from the lump sum payment and increased sales due to thedistribution of the coupons to potential customers while the financialinstitution benefits by selling the coupons for less than its purchaseprice. Individuals benefit from the increased spending power at theparticipating sponsor. In addition, the financial institution is notrequired to transfer any portion of the individual's payment to thesponsor.

FIG. 5 shows another embodiment of the present invention in which aparticular third party spending vehicle provider is not necessary.Instead, a financial institution 116 (perhaps the bank where theindividual banks), for example, issues a spending vehicle 114 directlyto the individual 110 that may be used at many different outlets for thepurchase of goods and or services. In return for the spending vehicle114, the individual 110 assigns payment rights 112, which may be anyamount equal to or less than the amount of the payment, directly to thefinancial institution 116. The financial institution 116 receives theappropriate amount for the individual's payment 120 from the third partypayor 118 after providing necessary payment information 122 to the payor118. The payment information may include name and account information sothat an electronic funds transfer may be completed.

Once the individual receives the spending vehicle and the individual hascompleted any process for activating the spending vehicle, theindividual may spend the dollar amount of value inherent in thatindividual's spending vehicle through participating sponsor or salesoutlets. Furthermore, the spending vehicle provider or sponsor may agreeto assign its rights and obligations in the spending vehicle to anotherentity at which the individual may spend or obtain the unspent dollaramount of the spending vehicle. The individual is therefore given evengreater flexibility in using the selected spending vehicle.

Once the spending vehicle is activated for the individual, in apreferred embodiment of the present invention, the individual may begiven a period of time in which to use the spending vehicle before aservice charge is applied. For example, the individual may incur noservice charge on the spending vehicle if the spending vehicle is usedwithin 90 days of being activated. In the event a minimum balanceremains in the spending vehicle after the initial “no fee” period, asmall monthly service charge may be levied against the spending vehicleuntil it is entirely used. Alternatively, after a period of time (e.g.,60 days) the spending vehicle provider may issue a check to theindividual for the balance left in the spending vehicle. Thesealternatives provide the individual with greater flexibility in usingthe selected spending vehicle.

Having shown and described a preferred embodiment of the presentinvention, those skilled in the art will realize that many variationsand modifications may be made to the described invention and still bewithin the scope of the claimed invention. Thus many of the elementsindicated above may be altered or replaced by different elements whichwill provide the same or substantially the same result and fall withinthe spirit of the claimed invention. It is the intention therefore tolimit the invention only as indicated by the scope of the claims.

1. A computerized method comprising the steps of: receiving information indicative of a government payment payable by a government authority to a payee; receiving information indicative of a selection by the payee to associate at least a portion of the government payment with a spending vehicle; receiving information indicative of an assignment of right from the payee entitling a third-party payor to retain at least a portion of the associated government payment; determining, via a processor, a load amount to be loaded on to the spending vehicle, with the load amount based on the portion of the government payment assigned to the third-party payor; and causing, via a processor, the spending vehicle to be loaded with the load amount.
 2. The method of claim 1, wherein upon loading, the funds corresponding to the load amount are immediately accessible by the payee.
 3. The method of claim 1, wherein the loading of the load amount on the spending vehicle is not subject to a loan agreement pursuant to regulatory banking laws between the payee and the third-party payor.
 4. The method of claim 1, wherein said assignment of right entitles the third-party payor rather than the payee to receive the retained portion of the associated government payment in exchange for issuing said spending vehicle.
 5. The method of claim 1, wherein the spending vehicle is selected from the group consisting of: a pre-paid credit card and a debit card.
 6. The method of claim 1, wherein the government payment is selected from the group consisting of: a tax refund payment and a social security payment.
 7. The method of claim 6, wherein the associated government payment is received from the government authority via an electronic transfer.
 8. The method of claim 1, wherein the load amount is equal to the portion of the government payment assigned to the third-party payor.
 9. The method of claim 1, wherein the load amount is less than the portion of the government payment assigned to the third-party payor.
 10. A non-transitory computer readable storage medium with an executable program stored thereon for associating government payments with spending vehicles, wherein the program instructs the processor to perform the following steps: receive information indicative of a government payment payable by a government authority to a payee; receive information indicative of a selection by the payee to associate at least a portion of the government payment with a spending vehicle; receive information indicative of an assignment of right from the payee entitling a third-party payor to retain at least a portion of the associated government payment; determine a load amount to be loaded on to the spending vehicle, with the load amount based on the portion of the government payment assigned to the third-party payor; and cause the spending vehicle to be loaded with the load amount.
 11. The computer readable medium of claim 10, wherein the loading of the load amount on the spending vehicle is not subject to a loan agreement pursuant to regulatory banking laws between the payee and the third-party payor.
 12. The computer readable medium of claim 10, wherein said assignment of right entitles the third-party payor rather than the payee to receive the retained portion of the associated government payment in exchange for issuing said spending vehicle.
 13. The computer readable medium of claim 10, wherein the load amount is equal to the portion of the government payment assigned to the third-party payor.
 14. The computer readable medium of claim 10, wherein the load amount is less than the portion of the government payment assigned to the third-party payor.
 15. A non-transitory computer readable storage medium with an executable program stored thereon for associating payments with spending vehicles, wherein the program instructs the processor to perform the following steps: receive information indicative of a payment payable by a payor to a payee; receive information indicative of a selection by the payee to associate at least a portion of the payment with a spending vehicle; receive information indicative of an agreement from the payee to receive funds loaded on the spending vehicle in exchange for a third-party payor receiving the associated payment; upon receipt of said information indicative of an agreement from the payee, notify the payor to deposit the associated payment in an account other than an account held by the payee or an account associated with the spending vehicle; determine a load amount to be loaded on to the spending vehicle, with the load amount based on the portion of the payment assigned to the third-party payor; and cause the spending vehicle to be loaded with funds representing the associated payment.
 16. The computer readable medium of claim 15, wherein the loading of the load amount on the spending vehicle is not subject to a loan agreement pursuant to regulatory banking laws between the payee and the third-party payor.
 17. The computer readable medium of claim 15, wherein the load amount is equal to the portion of the payment assigned to the third-party payor.
 18. The computer readable medium of claim 15, wherein the load amount is less than the portion of the payment assigned to the third-party payor.
 19. A non-transitory computer readable storage medium with an executable program stored thereon for associating payments with spending vehicles, wherein the program instructs the processor to perform the following steps: receive information indicative of an electronic payment payable by a payor to a payee; receive information indicative of a selection by the payee to associate at least a portion of the payment with a spending vehicle; receive information indicative of an agreement from the payee to receive funds loaded on the spending vehicle in exchange for a third-party payor receiving the associated payment; determine a load amount to be loaded on to the spending vehicle, with the load amount based on the portion of the payment assigned to the third-party payor; and cause the spending vehicle to be loaded with the load amount.
 20. The computer readable medium of claim 19, wherein the loading of the load amount on the spending vehicle is not subject to a loan agreement pursuant to regulatory banking laws between the payee and the third-party payor.
 21. The computer readable medium of claim 19, wherein the load amount is equal to the portion of the payment assigned to the third-party payor.
 22. The computer readable medium of claim 19, wherein the load amount is less than the portion of the payment assigned to the third-party payor. 